CIPD: Gig economy boosts income for 1.3 million workers – but thousands could be missing out on employment rights

Home»CIPD News»CIPD: Gig economy boosts income for 1.3 million workers – but thousands could be missing out on employment rights

Posted on Mar 17, 2017

New CIPD research provides first robust estimate of the size of the gig economy and highlights the need for greater clarity over and enforcement of employment rights

New research published today shows 4% of UK working adults aged between 18 and 70 are working in the ‘gig economy’, and nearly two-thirds of them (63%) believe the Government should regulate to guarantee them basic employment rights and benefits such as holiday pay.

That means approximately 1.3 million people are engaged in ‘gig work’ according to ‘To gig or not to gig: Stories from the modern economy’ a new report from the CIPD, the professional body for HR and people development. The report is based on a survey of 400 gig economy workers and more than 2,000 other workers, as well as 15 in-depth interviews with gig economy workers.

The research also found that, contrary to much of the rhetoric, just 14% of respondents said they did gig work because they could not find alternative employment. The most common reason for taking on gig work was to boost income (32%). Overall, gig economy workers are also about as likely to be satisfied with their work (46%) as other workers in more traditional employment are with their jobs (48%).

However, there were concerns raised by some workers interviewed for the report about the level of control exerted over them by the businesses they worked for, despite them being classified as self-employed. This is supported by the data, as just four in ten (38%) gig economy workers say that they feel like their own boss, which raises the question of whether some are entitled to more employment rights.

Peter Cheese, Chief Executive of the CIPD, the professional body for HR and people development, said:

“This research shows the grey area that exists over people’s employment status in the gig economy. It is often assumed that the nature of gig work is well-suited to self-employment and in many cases this is true. However, our research also shows many gig economy workers are permanent employees, students, or even the unemployed who choose to work in the gig economy to boost their overall income.

“Our research suggests that some gig economy businesses may be seeking to have their cake and eat it by using self-employed contractors to cut costs, while at the same time trying to maintain a level of control over people that is more appropriate for a more traditional employment relationship. Many people in the gig economy may already be eligible for basic employment rights, but are confused by the issue of their employment status.

“It is crucial that the Government deals with the issue of employment status before attempting to make sweeping changes, else they risk building foundational changes on shifting sands. We welcome the Chancellor’s decision to wait for the Taylor Review before looking to make any changes in tax levels. We would like to see a full consultation on the complex issue of employment status, which explores whether it is possible to have greater clarity and consistency on this issue across employment, tax and benefits.”

The findings also show mixed feelings among gig economy workers about the extent to which gig economy businesses should provide employment rights and benefits:

More than half (57%) of gig economy workers agree that gig economy firms are exploiting a lack of regulation for immediate growth.

Half (50%) also agree that people working in the gig economy choose to sacrifice job security and workers’ benefits in exchange for greater flexibility and independence.

Gig economy workers were equally likely to agree (36%) as disagree (35%) that ‘the gig economy should not be regulated and companies should compete to offer workers fair pay and benefits, even if it means less income and job security for people’.

The report also reveals that only a quarter (25%) of gig economy workers say it is their main job, suggesting most use it to boost their overall income rather than depend on it. However, 60% say they don’t get enough work on a regular basis in the gig economy, and the research shows that income earned from gig work is typically low, with median reported income ranging from £6 to £7.70 per hour.

Despite the typically low earnings reported by gig economy workers, they remain on the whole satisfied with their income, with 51% saying they are satisfied and 19% dissatisfied with the level of income they receive. This is significantly higher than the level of satisfaction with pay reported by other workers, where 36% are satisfied and 35% are dissatisfied.

Peter Cheese continued:

“The research shows the challenge that policy-makers face in regulating the gig economy and finding the right balance between providing flexibility for businesses and employment protection for individuals. The variety of business models in the gig economy, the different types of working arrangements and the varied circumstances of people engaged in providing services in different ways means finding the right response to prevent abuses is difficult, without penalising those who are benefitting.

“We are pleased that the Government has commissioned Matthew Taylor to lead a review of modern employment practices and look forward to working with his team. The Government also needs to take a number of steps to help clarify people’s employment rights and enforce existing legislation better, such as supporting a ‘know your rights’ campaign, so more people are aware of what protection they can expect.

“In addition, it is crucial that the Gangmasters and Labour Abuse Authority is given sufficient resources to monitor and enforce compliance with existing employment rights. There is also a case to strengthen the role of Acas to allow it to proactively work with business to improve their working practices if they are in danger of falling foul of the law through a lack of resources or ignorance.

“Finally, we need better guidance for employers on atypical working, setting out the key principles of good work and responsible employment and the HR and people management practices that underpins this.”